The Competition Commission of India ( CCI/Commission) vide order dated 30.08.2018 imposed penalty of Rs. 9,72 ,943/- on Karnataka Film Chamber of Commerce (KFFC) for acting in violation of the provisions of the Competition Act,2002 (“the Act” ) by limiting the production and supply of dubbed movies in the State of Karnataka and thereby violating Section 3(3)(b) and Section 3(1) of the Act.

The investigation by the Commission was directed based on the information filed by Mr. G. Krishnamurthy (Informant) against the KFCC in addition to others viz. Kannada Okkuta (Organization for protection of Kannada culture) with their respective Presidents, and Mr. Jagesh (Popular Kannada Film Star and politician) alleging that not only were the Opposite Parties (OPs) causing hindrances and roadblocks to prevent his Tamil movie originally titled as “Yennai Arindhal” ,to be released in the State of Karnataka post dubbing which is now titled “Satyadev IPS” but also inducing public protests against the said release.

In the Information, it was also highlighted that the Karnataka Film Chamber of Commerce has been scrutinized and penalised by the Commission earlier for a similar matter of restricting the exhibition of dubbed content in the State of Karnataka vide order dated 27.07.2015 in Case no. 58 of 2012.

The Commission, while determining a prima facie breach also granted interim relief to the Informant under Section 33 directing the OPs and their affiliates not to obstruct, prevent, hinder or adversely affect the release of another dubbed movie titled “Dheera” in the State of Karnataka.

Investigation by the DG:

The vital evidence in this matter considered by the DG was a Press Meet available on YouTube which was attended by all the opposite parties which clearly was intended to prevent the release of the dubbed movie showed meeting of minds. The Commission noted that in the Press Meet the opposite parties actively advocated the cause of condemning dubbed Kannada content/films. In addition to the Press Meet specifically targeting the release of dubbed films in the State of Karnataka, Mr. Jaggesh, a renowned Kannada film star and Politician also took to Twitter and issued multiple tweets, whereby he tried to charge the emotions of Kannada speaking people and instigated them to agitate against the dubbed cinema by specifically calling for protests at theatres where “Sathyadev IPS” belonging to Informant was going to be screened.

Further, Mr. N.M Suresh (Honorary Secretary of KFFC) and Mr. H.Shivram (Honorary Secretary of Kannada Okkuta) were found liable by the DG under Section 48.

The investigation of the DG was challenged on the ground that the DG has wrongly narrowed down the whole investigation to the banning of Informant’s film whereas the OPs work towards a larger objective of protecting the welfare of its members comprising of producers, distributors and exhibitors, who are part of the film industry in the State of Karnataka.

However, the Commission found this defense as not only misleading but also a façade to cover up the anti-competitive practices committed by them against the release of dubbed content in the State of Karnataka.

Further, Mr. Sa. Ra. Govindu (President of KFCC), challenged the investigation of the DG stating he only attended the press meet in his personal capacity and on invitation by Mr. Vatal Nagraj (President of Kannada Okkuta).

Analysis by the Commission

The Commission agreeing to the finding of DG concluded that in the Press Meet, the opposite parties actively advocated the cause of condemning dubbed Kannada content/films.

As per Film Star Jaggesh, it was noted by the Commission that through these tweets, he was able to mobilise the masses emotionally to counter the release of dubbed content in general and the Informant’s film in particular. The Commission further noted that the tenor of his tweets and the set up in which such tweets, coupled with his stardom, were instrumental to mobilise the sentiments of the masses against dubbed movies.

As regards, Mr. N.M Suresh (Honorary Secretary of KFFC) and Mr. H.Shivram (Honorary Secretary of Kannada Okkuta), the commission found them not liable under Section 48, as the DG could not place sufficient evidence of attending the press meet or inducing public sentiments and holding the position of Honorary Secretary, respectively, quoting that liability under Section 48 is ‘derivative’.

The Commission imposed a penalty of Rs. 9, 72,943/- on KFFC calculated at 10% of the average of its income under the heads- Subscription, Registration fees and Admission fees obtained from the financial statements of the year 2014-15, 2015-16, 2016-17, keeping in mind that the KFFC has been found to be indulging in anti-competitive conduct repeatedly.

In addition to this, the Commission also noted that KFFC was directed to bring in place a Competition Compliance Manual to educate its members the basics of Competition Policy while disposing off Case no. 58 of 2012. Therefore, KFFC was again directed by the Commission in exercise of its powers under Section 27(g) to bring in place a Competition Compliance Manual within 90 days from the receipt of this order.

Further, monetary penalty of Rs. 15,121/- and Rs. 2, 71,286/- calculated at 10% of average income was imposed on the President of KFFC and Mr. Jaggesh.

The Commission despite granting sufficient opportunities to Kannada Okkuta and Mr. Vatal Nagraj (President of Kannada Okkuta), could not acquire sufficient information with respect to their financial statements and Income Tax returns in order to impose a proper penalty as of now.

A separate order with respect to the penalty imposed on the above-mentioned is awaited.

Comments: This is a case of repeated violation by KFCC i.e. blatantly restricting the exhibition of dubbed movies in the State of Karnataka on grounds of protecting “cultural identity” , which the Commission found to have a shade of recidivism.

 Comdt. (Retd.) M. M. Sharma heads the Competition Law & Policy team in VA since 2009 and has over 30 years’ experience as an Advocate of Delhi High Court and holds a Post Graduate Diploma in Economics of Competition Law from Kings College, London. He has worked in the Competition Commission of India (CCI) as Additional Registrar during 2006-2008 and was responsible for drafting the Implementing Regulations under the Competition Act, 2002. He has experience of working as Head-Legal /In-house Counsel for a large Corporate Group in the Steel and Power sector before joining VA in 2009. He has represented clients as an independent arguing Counsel in landmark cases decided by CCI, the Competition Appellate Tribunal (COMPAT) , High Courts and the Supreme Court. As a prolific writer, he contributes articles and is regularly quoted on competition issues in National Newspapers and interviewed by TV Channels. He also teaches as a visiting faculty in various Universities and Institutions and is widely regarded as a subject expert in various Committees of Apex Business Chambers, such as FICCI, CII, ASSOCHAM and PHD CCI.
 Mr. Sharma has been mentioned as a “Notable Practitioner” in the “Competition/Antitrust” category of Chambers & Partners (Asia Pacific) Ranking of Leading Lawyers for Business in India for the year 2012 and 2013. VA’s competition law and policy team has also been awarded the Law Firm of the Year Award for “Competition/Antitrust Law” for 2013 by the Indian Business Law Journal.